UPIC / ZPIC Referrals of MDs and NPs to State Boards!

June 9, 2017 by  
Filed under Featured, ZPIC Audits

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Did a UPIC or ZPIC marke a referral to your state licensure board?(June 9, 2017):  You aren’t paranoid, your utilization, coding and billing practices are, in fact, being watched.   The Centers for Medicare and Medicaid Services (CMS) currently transitioning over to using a Unified Program Integrity Contractor (UPIC) in your jurisdiction to serve as program integrity contractors.  During this transition period, you may also be audited by the outgoing Zone Program Integrity Contractor (ZPIC) responsible for auditing your part of the country.  Although you may have never been audited, been contacted by, or even heard of a UPIC or a ZPIC, that doesn’t mean that they aren’t monitoring your business practices on an ongoing basis.  In fact, as Section 2.6.4 of the “Uniform Statement of Work” (SOW) published by CMS states that contractors serving as a UPIC:

” . . . will integrate the program integrity functions for audits and investigations across Medicare and Medicaid, and ensure that CMS’s national priorities for both Medicare and Medicaid are executed and supported locally.”

Similarly, ZPICs are required to engage in comprehensive data analysis activities as part of their contractual obligations with the government.  As Section 1.3.1 of the most recent ZPIC Statement of Work requires:

“The ZPIC shall review and analyze a variety of data in order to focus its program integrity efforts by identifying vulnerabilities and/or specific providers for review and investigation within its zone, referral of potential fraud, waste and abuse cases to law enforcement, and pursuance of administrative actions. Further, the ZPIC shall be proactive and aggressive in pursuing many different sources and techniques for analyzing data in order to reduce any of its risks within this [Statement of Work].”

As the ZPIC Statement of Work further notes in Section 4.2:

The ZPIC shall provide a variety of data analysis, statistical analysis, and trending activities to enhance the detection and prevention of Medicare and Medicaid potential fraud, waste and abuse in the participating state(s). The ZPIC shall use appropriate CMS Medicare data, as well as data from other sources such as Medicaid data, to reach this end. 

Successful accomplishment shall require a significant amount of cooperation with the participating state(s), law enforcement, and other task orders within the ZPIC zone. It may also require significant cooperation with other ZPICs

ZPICs have used sophisticated data mining techniques to identify physicians and other health care providers whose utilization, coding and / or billing behavior is different from that of the provider’s peers.  Once an outlier is identified, the ZPIC has a number of actions it can take.   For instance, in recent months, we have seen a noticeable increase in the number of referrals that have been made by a ZPIC to a particular provider’s state licensure board.  In this article, we examine these referral actions in more detail.

I.   UPIC / ZPIC Targets in 2017:

The government’s efforts to consolidate their Medicare and Medicaid program integrity efforts under a single contract are well underway.  As a result, some health care providers are already receiving requests for records and / or notice of an audit from a Unified Program Integrity Contractor (UPIC) rather than from their former ZPIC. In large part, this is a distinction without a difference since the CMS contractor awarded the UPIC contract most likely previously served as ZPIC for the same jurisdiction.   Once fully implemented, the UPIC program will combine integrate the Medicare and Medicaid program integrity functions that have previously been performed by ZPICs, Program Safeguard Contractors (PSCs) and Medicaid Integrity Contractors (MICs).  Importantly, the Chapter 4 of the Medicare Program Integrity Manual expressly notes that the program integrity duties and responsibilities currently outlined in the chapter as applicable to ZPICs also fully apply to UPICs.  In any event, many providers are continuing to receive requests for records and notice of an audit from ZPICs rather than the UPIC covering their jurisdiction.  Provider types primarily targeted in 2017 have included:

  • Home health agencies.
  • Hospice organizations.
  • Physician practices.
  • Pain management practices and pain management physicians.
  • Nurse practitioners.
  • Chiropractic practices.
  • Multidisciplinary practices owned by a chiropractor.
  • Independent clinical laboratories.
  • Physical therapy / occupational therapy / speech therapy services.
  • Independent diagnostic testing facilities.
  • Ambulance service providers.

Is your organizational type listed above?  If not, that still doesn’t mean that you won’t be audited by a ZPIC, or possibly even a UPIC.  If your organization is engaging in utilization, coding or billing practices that appear to be out-of-sync with those of its peers, there is a good chance that you will soon be audited by the a ZPIC, UPIC or a specialty program integrity working for CMS.

II.   UPIC / ZPIC Referrals to State Licensure Boards and Professional Societies:

The UPIC / ZPIC responsible for conducting Medicare program integrity activities in your ZPICs part of the country is constantly on the lookout for aberrant provider practices.  For instance, in a case our law firm handled, a ZPIC program integrity contractor conducted an audit of Evaluation & Management (E/M) claims billed by a Nurse Practitioner.  In this particular case, the ZPIC auditor concluded that the provider lacked the requisite level of physician supervision to conduct the E/M services at issue.  To be clear, this case did not involve the billing of “incident to” claims.  Rather, it hinged on the fact that some states prohibit a Nurse Practitioner from independently diagnosing and treating a patient unless a requisite level of physician oversight or supervision is in place.  In this particular case, the ZPIC auditor alleged that there was no evidence that the required level of physician supervision had been met.  As a result, the ZPIC denied the audited claims and alleged that the provider had submitted non-payable claims to the Medicare program for payment.  Notably, the ZPIC didn’t stop there – it also filed a complaint against the Nurse Practitioner with the state Board of Nursing, alleging that the nurse’s actions were a violation of the state Nurse Practice Act.  Unfortunately, UPIC / ZPIC referrals to state licensing boards appear to growing each year.

III.   What is the Regulatory Basis for a UPIC / ZPIC to Make a Referral to a State Licensure Board?

As set out in Chapter 4 of the Medicare Program Integrity Manual, ZPICs are required to make a referral to a provider’s state licensure board if it finds that the provider engaged in unethical or improper practices.”  As Section 4.18.2 of the MPIM provides:

The ZPIC shall refer instances of apparent unethical or improper practices or unprofessional conduct to state licensing authorities, medical boards, the QIO, or professional societies for review and possible disciplinary action. . . (emphasis added).

While the mandates set out in a specific state’s Nurse Practice Act, Medical Practice Act, or other licensed professional’s Practice Act may vary, one thing is for certain – virtually every State Practice Act includes broad provisions which ban conduct that is considered to be unprofessional or unethical.  These provisions are typically so general that a ZPIC could easily conclude that a referral is required in wide variety of situations.  These include, but are not limited to:

  • Physician: Failure to exercise proper level of supervision over a Nurse Practitioner, Physician Assistant and / or any other member of his staff.
  • Physician: Failure to properly document the services provided.
  • Physician: Providing services that are medically unnecessary.
  • Physician: Billing for services that were not provided.
  • Nurse Practitioner: Performing certain patient care services without the requisite level of physician supervision in place.
  • Nurse Practitioner: Inappropriately prescribing controlled substances to one or more patients.
  • Nurse Practitioner: Failure to order a urine drug screen before prescribing controlled substances in a case where the patient has exhibited non-compliant behavior.

As the regulatory language further reflects in Section 4.18.2 further requires, if the ZPIC concludes that a licensee has engaged in unethical or improper conduct, the contractor is also supposed to make a referral to professional societies to which a licensed health care provider belongs.

Prior to making a referral to the state licensing board, it is worth noting that the ZPIC is required to confer with the appropriate Medicare Administrative Contractor (MAC) so that duplicate referrals are not by both contractors.  As this portion of Section 4.18.2 states:

The ZPIC’s and the MAC’s MR staffs shall confer before such referrals, to avoid duplicate referrals. The ZPIC shall gather available information and leave any further investigation, review, and disciplinary action to the appropriate professional society or State board. Consultation and agreement between the ZPIC’s and the MAC’s MR staffs shall precede any referral to these agencies.

While not stated in Section 4.18.2, these coordinative efforts may also lead to a provider being placed on prepayment review and / or subjected to a number of other administrative sanctions.

IV.   And the “Hits” Just Keep on Coming – Additional Referrals Made by a UPIC / ZPIC:

Chapter 4, Section 4.18.3 of the MPIM requires that ZPICs also make a referral to the Medicare Quality Improvement Organization (QIO) if a situation involving potential patient harm is identified.  As the regulations state, in part:

If potential patient harm is discovered during the course of screening a lead or through the investigation process, the ZPIC shall refer those instances to the QIO, state medical board, or state licensing agency. In addition to making the appropriate referrals, the ZPIC shall notify the COR and IAG BFL within two (2) business days once the potential patient harm issue is discovered.

If the ZPIC refers a provider to the State licensing agency or medical society (i.e., those referrals that need immediate response from the State licensing agency), the ZPIC shall also send a copy of the referral to the QIO.

As program integrity contractors, ZPICs have been granted access to the government’s Fraud Investigative Database (FID).  They are required to enter and update Medicare fraud, waste and abuse investigations that they have initiated into the database.  ZPICs are also required to input updates on cases, payment suspensions and requests for information that they have performed at the request of law enforcement or CMS.  Health care providers need to keep in mind that a wide range of federal and state law enforcement agencies maintain access to the ID.  As discussion in Chapter 4, Section 4.11.1 of the MPIM, these include, but are not limited to:

  • All ZPICs.
  • National Benefit Integrity Medicare Drug Integrity Contractor (NBIMEDIC).
  • MAC provider enrollment units.
  • CMS.
  • FBI.
  • DOJ.
  • HHS/OIG.
  • Medicaid Program Integrity Directors, State Utilization Review (SUR) officials, and Provider Enrollment units.
  • Medicaid Fraud Control Units (MFCUs).
  • Other federal and state partners seeking to address program integrity concerns in judicial or state health care programs.

As further described in Chapter 4, Section 4.11.1.1 of the MPIM, not all ZPIC audit findings are reported on the FID.  Cases that are not captured by ZPICs on the FID include:

  • Individual complaints (statements alleging improper entitlement);
  • Simple overpayment recoveries (not involving potential fraud), complaints that are returned to the AC or MAC second-level screening staff (or PSC or ZPIC, if applicable); and
  • Medical review abuses.

V.   UPIC / ZPIC Referrals to State Licensure Boards Based Solely on Data Mining are Increasing:

UPIC / ZPIC referrals to state licensure boards are not limited to only situations where a claim-by claim audit has been conducted.  We are currently seeing referrals based solely on conclusions reached through data mining, where no actual audit of the provider’s medical records has yet been conducted.  Examples of these situations include:

  • Nurse Practitioner: The provider’s prescription practices with respect to controlled practices are seen as excessive when compared to those of the Nurse Practitioner’s peers.
  • Physician: Based on the level of E/M services billed, the ZPIC believes that the physician is treating more patients than can be seen in a typical workday.

VI.   Protecting Your License. 

A wide range of physicians, nurse practitioners and other licensed health care providers participating in the Medicare program are subject to audit by a UPIC or a ZPIC.  It is therefore imperative that you take steps NOW to better ensure that your medical necessity, documentation, billing and coding practices fully comply with state and federal statutory and regulatory requirements.  The development and implementation of an effective Compliance Program is an essential first step if you want to reduce your level of regulatory and licensure risk.  To the extent that you already have a Compliance Program in place, you need to periodically conduct internal auditing and monitoring activities to better ensure your continued adherence with applicable rules and regulations.

As described, a ZPIC may make a referral to your state licensing board based solely on their analysis of a provider’s utilization, coding and billing practices, even though the UPIC / ZPIC has never contacted you or reviewed a single medical record.  Nevertheless, most UPIC / ZPIC referral cases are, in fact, precluded by a UPIC / ZPIC audit of your medical records.  In such cases, there is a high likelihood that your practice will soon be faced with an administrative overpayment and that you may be required to respond to a complaint the UPIC / ZPIC has filed with your state licensure board.

We recommend that you immediately contact qualified health care legal counsel at the first sign that a UPIC / ZPIC audit or review may be underway.  There are steps you can take early in the process that can help you avoid both a sizeable overpayment finding and a possible referral to the state licensure board.  Should you fail to affirmatively respond to a UPIC / ZPIC audit until an overpayment determination has been made, your chances of prevailing in the administrative appeals process may be significantly diminished.  Please feel free to give me a call if you have received a ZPIC request for records or have been assessed an alleged overpayment by a UPIC or ZPIC.

Robert LilesRobert W. Liles, J.D., M.B.A., M.S., serves as Managing Partner at Liles Parker, Attorneys and Counselors at Law.  He has extensive experience representing health care providers in UPIC / ZPIC audits and in the Medicare appeals process.  He also regularly represents a wide range of health care providers in connection with complaints filed with state licensing boards.  For a complimentary consultation, please give Robert a call.  He can be reached at:  1 (800) 475-1906.

ZPIC Audit: Will Your Case be Referred to DOJ or HHS-OIG for Fraud?

March 10, 2016 by  
Filed under Featured, ZPIC Audits

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tiny-target-crosshair(March 10, 2016): Has your practice, home health or hospice received an audit letter from a Zone Program Integrity Contractor (ZPIC)?  If so, one of the first questions you are likely to ask is how did this ZPIC audit get started? Why is our practice being targeted in a ZPIC audit? As a review of the administrative enforcement landscape will show, there are a myriad of tools at the disposal of the government (and its contractors) to identify and target a health care physician provider or supplier for ZPIC audit or investigation. In this article, we will provide an overview of the primary targeting tools utilized by the government and its various Medicare contractors.

I. Primary Source of Information Used to Target a Medicare ZPIC Audit.

As Chapter 2, Sec. 2.4.C of the Medicare Program Integrity Manual (MPIM) reflects:

“Claims data is the primary source of information used to identify and target fraudulent, wasteful or abusive activities.”

ZPICs around the country have been given ready access to a wide variety of claims coding, billing and utilization databases and are expected to perform complex data analysis with this data in an effort to ferret out health care providers and suppliers whose billing history appears to suggest that improper coding and / or billing practices may be taking place. Frankly, that’s the problem with ZPIC targeting methods. If a health care provider’s claims utilization and billing practices are outside of the norm (making the provider an “outlier”), that provider is likely to be audited or investigated by a ZPIC or another contractor working for the Centers for Medicare and Medicaid Services (CMS).

II. Secondary Sources of Data Used by ZPICs to Identify and Target Fraud and Abuse.

As set out in the MPIM, Sec. 2.4.D, CMS has directed ZPICs to consider the following additional sources of data when determining whether further analysis against a health care provider or a specified set of claims is needed. These additional sources of data include, but are not limited to:

• OIG and Government Accountability Office (GAO) reports;
• Fraud Alerts;
• Beneficiary, physician and provider complaints;
• Appeals data from QICs, including appeals overturn rate for a particular type of claim;
• Referrals from the QIO, other contractors, CMS components, Medicaid fraud control units, Office of the U.S. Attorney, or other federal programs;
• Suggestions provided directly or implicit in various reports and other materials produced in the course of evaluation and audit activities, (e.g., contractor evaluations, State assessment, CMS-directed studies, contractor or State audits of providers);
• Referrals from medical licensing boards;
• Referrals from the CAC;
• Peer Review Reports such as the First look Analysis Tool for Hospital Outlier Monitoring (FATHOM) and Program to Evaluate Payment Patterns Electronic Report (PEPPER), and Comparative Billing Reports;
• Information on new technologies and new or clarified benefits;
• Provider cost reports;
• Provider Statistical and Reimbursement (PS&R) System data;
• Enrollment data;
• Overpayment data;
• Pricing, data analysis, and coding (PDAC) data;
• Referrals from other internal and/or external sources (e.g., MAC audit staff, audit staff or, MAC quality assurance (QA) staff);
• Medicare Learning Network–which includes MedLearn Matters articles and Quarterly Provider Compliance Newsletters;
• IBM Cognos support for the Part D and Drug Data Processing System (DDPS) using the Teradata data repository;
• CMS prepared data, such as a listing of distinct providers or suppliers and/or bills that require medical review; and
• CMS Chronic Conditions Data Warehouse (CCW).

III. When Facing a ZPIC Audit, the “Fix” is In – Guilty Until Proven Innocent.

Rather than reviewing a provider’s claims with no preconceptions in place, we believe that once a provider is identified as an outlier, there is a presumption on the part of ZPIC auditors and claims reviewers to find that the provider has engaged in improper billing activities. As the former General Counsel for one the ZPIC’s once stated:

“All of the claims audits we conduct are in connection with either a fraud case or a POTENTIAL fraud case.” (paraphrased).

Frankly, this statement says it all. ZPICs view themselves as an extension of law enforcement, despite the fact that they a merely a federal contractor working under the direction of CMS. This can place health care providers in a no-win situation. On the one hand, as a participating provider in the Medicare program, a health care provider has an obligation to cooperate with a ZPIC conducting a claims audit. Unfortunately, ZPIC investigators often request to interview physicians and other clinical staff. Since the ZPIC investigator is not technically a law enforcement official, witnesses are not advised of their rights against self-incrimination and may inadvertently make one or more statements that are not in their interests. This is especially important when you consider the fact that one of the factors currently being used as an evaluation metric when assessing the performance of ZPICs by CMS is whether the contractor has been making suspected fraud referrals to the Department of Health and Human Services, Office of Inspector General (HHS-OIG) and / or the U.S. Department of Justice (DOJ) for law enforcement review and prosecution. In fact, as HHS-OIG’s 2016 Work Plan states:

We will review the level of benefit integrity activity performed by Medicare benefit integrity contractors in CYs 2012 and 2013. This review will highlight trends in integrity activities and allow for a quick comparison of program results across years, across contractors, and across the parts of the Medicare program. CMS contracts with entities to carry out benefit integrity activities to safeguard Medicare against fraud, waste, and abuse. Activities that these contractors perform include analyzing data to identify aberrant billing patterns, conducting fraud investigations, responding to requests for information from law enforcement, and referring suspected cases of fraud to law enforcement for prosecution. (Emphasis added)

Regardless of whether the ZPIC investigator seeks to conduct interviews of your staff in an audit, after reviewing your medical documentation, the ZPIC may decide that its findings warrant referring the case to HHS-OIG or to DOJ for civil and / or criminal review and enforcement. In most cases, the ZPIC will likely find conclude that although an overpayment has been identified, the provider’s conduct does not warrant referring the case outside of the administrative appeals process. The ZPIC will then choose to treat the improper billing practices identified as an overpayment rather than as fraud.

IV. Responding to a ZPIC Audit.

In responding to a ZPIC audit, it is important to remember that although they may not technically be “bounty hunters,” it is to their benefit to find that an overpayment has occurred. These overpayments are often based on overlapping technical (such as an incorrect place of service code) and substantive (such as lack of medical necessity) reasons for denial.

Immediately upon learning of a ZPIC audit, regardless of whether the audit is a probe sample or appears to be an expanded sample of claims, we recommend that you contact legal counsel experienced in handling ZPIC audits and investigations. There are preemptive steps you may be able to take that can reduce the likelihood of a large overpayment. Addressing problematic claims on the front end may even held you avoid a situation where a ZPIC seeks to place your practice on prepayment review or recommend to CMS that you be suspended from the Medicare program. It may also stop the ZPIC from making a fraud referral to HHS-OIG or DOJ for review, assessment and possible prosecution.

Robert LilesRobert W. Liles, M.B.A., M.S., J.D., serves as Managing Partner at Liles Parker, Attorneys & Counselors at Law. Liles Parker is a boutique health law firm, with offices in Washington DC, Houston TX, San Antonio TX, McAllen TX and Baton Rouge LA. Robert represents health care providers and suppliers around the country in connection with Medicare audits by ZPICs, SMERCs, RACs and other CMS-engaged specialty contractors. Our firm also represents health care providers in HIPAA Omnibus Rule risk assessments, privacy breach matters, State Medical Board inquiries and regulatory compliance reviews. For a free consultation, call Robert at: 1 (800) 475-1906.

ZPIC Update: The Impact of Being Placed on Medicare Prepayment Review.

March 9, 2016 by  
Filed under Featured, Medicare Audits

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Medicare Prepayment Reviews can Bankrupt a Practice(March 9, 2016): Why have the number of prepayment reviews by Medicare contractors increased dramatically in recent years? Approximately seven years, Congress passed, and the President signed into law the Affordable Care Act. Since that time, the Centers for Medicare and Medicaid Services (CMS) and its contractors have accelerated their move away from “Pay and Chase” enforcement approaches. Today, Zone Program integrity Contractors (ZPICs), such as AdvanceMed and Health Integrity, AND Supplemental Medical Review Contractors (SMERCs), such as Strategic Health Solutions are rapidly moving towards preventative audit strategies. The purpose of this article is to briefly discuss the types of administrative enforcement actions, such as prepayment reviews, that we are currently seeing around the country.

I. Additional Documentation Requests (ADRs).

Providers should not confuse receiving an “Additional Document Request” (ADR), also sometimes referred to as an “Additional Development Request,” with being placed on prepayment review.

ADRs are often initiated by a provider’s Medicare Administrative Contractor (MAC).
ADRs typically relate to a particular probe or edit conducted by the MAC.
ADRs may be focused on specific services, length of stay, a specific provider or a specific diagnosis.

At some point in time, practically every health care provider and supplier participating in the Medicare program will receive Additional Documentation Requests (ADRs), asking that the provider or supplier submit all associated supporting documentation for review before the contractor will be able to make a coverage and payment determination with respect to that particular claim. ADRs are not uncommon. Nevertheless, it is important to keep in mind that ADRs serve a purpose. If the supporting documentation submitted to the Medicare contractor in response to an ADR fails to support coverage and payment requirements, the contractor may choose to place provider or supplier on 100% prepayment review.

II. Medicare Prepayment Reviews.

In most instances, a health care provider will not receive advance notice that it has been placed on prepayment review. Notably, this is directly contrary to Medicare’s regulations. Chapter 3 of the Medicare Program Integrity Manual (PIM) mandates notice to the provider prior to the initiation of provider-specific prepayment review:

“The Zone Program Integrity Contractors shall notify selected providers prior to beginning a provider-specific review by sending an individual written notice. ZPICs shall indicate whether the review will occur on a prepayment or postpayment basis. ZPICs shall maintain a copy of the letter and the date it was mailed. This notification shall be mailed the same day that the edit request is forwarded to the MAC. Refer to Exhibit 45 for the letter to be sent.”
See § 3.2.2 – Provider Notice, § A. Notice of Provider-Specific Review.

III. Direct Impact of Being Placed on Medicare Prepayment Review.

At first blush, being placed on prepayment review appears reasonable. It’s difficult to think of any other industry that gets paid practically “on demand” while presenting a payor with little or no proof that a covered service was actually rendered. Unfortunately, unless this administrative condition is promptly handled, prepayment review can ultimately lead to insolvency and / or bankruptcy, depending on the specific payor mix at issue.

How can occur? Most small health care providers assume that Medicare payments will always be timely. As a result, emergency / contingency funds and rainy-day savings accounts are often a thing of the past. Many small providers keep only enough funds in their business accounts to cover the practice’s overhead for 1 – 2 months. If your payor mix is 70% Medicare and 30% private payor and self-pay, being placed on prepayment review will effectively cut off most of your income for as long as the prepayment review requirement stays in place.

IV. Having a Medicare Prepayment Review Action Lifted.

We have successfully worked with numerous providers and suppliers in recent years in an effort to have the prepayment review requirement lifted. There is no “silver bullet” when it comes to having a provider taken off of prepayment review. It can’t be done overnight but it can be accomplished within a relatively short period of time. The key is not to wait – you must take action to address the prepayment review. Failure to do so can result in your practice, home health agency or clinic remaining on prepayment review for up to a year.
As a final point, it is important to keep in mind that being placed on prepayment review is a symptom. It is not the underlying problem. Is a suspension or revocation action around the next corner? Has a qui tam been filed?

V. Possible Follow-up Enforcement Actions.

If your practice, home health agency or clinic is placed on prepayment review, it is essential that you proactively deal, not ignore the problem. Hoping that the prepayment review will just “go away” is wishful thinking. In fact, should you fail to address the problem, you should keep in mind that a poor showing in connection with a prepayment audit, can lead to:

Postpayment audit.
• Referral to CMS for possible suspension action.
• Referral to CMS for possible revocation from the Medicare program.
• Referral to HHS-OIG for possible CMP action.
• Referral to DOJ for possible False Claims Act or criminal review.

VI. Conclusion.

Left unaddressed, something as mundane as an ADR can lead to a provider or supplier being placed on prepayment review, and ultimately possibly result in even more severe administrative enforcement action. We therefore recommend that you carefully review each ADR you receive and review your submissions of supporting documentation for accuracy and completeness prior to sending it in to the contractor. Prepayment reviews, postpayment audits, suspension actions, revocation actions and referrals to law enforcement are all possible outcomes if your documentation and / or business practices fail to fully comply with applicable regulatory requirements. How can you avoid these adverse events? A huge first step would be for you to develop, implement and adhere to the provisions of an effective Compliance Program.

Robert LilesRobert W. Liles, M.B.A., M.S., J.D., serves as Managing Partner at Liles Parker, Attorneys & Counselors at Law. Liles Parker is a boutique health law firm, with offices in Washington DC, Houston TX, San Antonio TX, McAllen TX and Baton Rouge LA. Robert represents health care providers and suppliers around the country in connection with Medicare audits by ZPICs, SMERCs, RACs and other CMS-engaged specialty contractors. Our firm also represents health care providers in HIPAA Omnibus Rule risk assessments, privacy breach matters, State Medical Board inquiries and regulatory compliance reviews. For a free consultation, call Robert at: 1 (800) 475-1906.

Medicare Overpayment Demands: The Financial Timeline and Options

March 6, 2015 by  
Filed under Featured, Medicare Audits

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doctor-hundred-dollar-billThe process of Medicare contractors – such as Zone Program Integrity Contractors (ZPIC) and Recovery Audit Contractors (RAC) – issuing adverse medical review findings and Medicare Administrative Contractors (MAC) subsequently demanding repayment of alleged overpayments can be very daunting for providers. This is particularly true when Medicare contractors employ statistical sampling methodologies which expand overpayment sums to a designated universe of claims beyond just the actual claims reviewed. A few thousand dollars worth of claims suddenly becomes tens or even hundreds of thousands of dollars. In many instances, providers will choose to appeal adverse determinations, ready to defend the good faith provision of services based on the medical needs of its patients. Understanding the financial implications and timeline of an overpayment assessment is hugely important. Should the provider pay the overpayment up front? If the provider can’t pay the overpayment sum immediately, how can it work with Medicare to repay the sum in a financially feasible manner? What if the provider doesn’t want to repay the overpayment – what steps will Medicare take?  These questions are best addressed in reverse order.

I.  Recoupment: Short-term Strategies for Delaying

Medicare expects providers to repay any overpayment as quickly as possible. If Medicare does not receive payment within 40 calendar days from the date of the MAC’s first demand letter, Medicare will recoup the full overpayment amount beginning on day 41, meaning the overpayment will be recovered from current payments due or from future claims submitted. There are multiple ways to delay recoupment, including by submitting a rebuttal to your MAC within 15 days of the initial demand letter (no guarantee) and filing appeal requests for the first two levels of appeal within specified time frames. Specifically, a provider must file the first level appeal – called the redetermination level – within 30 days of the initial demand letter to prevent recoupment through the time that a redetermination decision issues. If the redetermination decision is unfavorable, the provider must file the second level appeal – called the reconsideration level – within 60 days of the redetermination decision. If the reconsideration decision is also unfavorable, Medicare will initiate recoupment 30 days after the reconsideration decision is issued. If the reconsideration is partially favorable, and the overpayment sum requires recalculation, recoupment will begin 30 days after the recalculated demand.

It is important for providers to understand that even while recoupment is stalled, interest accrues starting with the date of the initial demand letter and is assessed every 30 days thereafter. While capitalization does not occur, the interest rate is quite high, at 10.50% as of January 21, 2015. Even if a provider is successful at postponing recoupment, the reality is that if a provider is at all unsuccessful through the first two levels of the Medicare administrative appeals process, recoupment will begin if the provider does not repay the overpayment and the provider likely must wait years to have a hearing scheduled before an Administrative Law Judge. Given that interest accrues and recoupment delay measures are really a short-term strategy, providers should use these tactics to buy time for serious financial planning. If a provider can repay some or all of the overpayment upon demand, the provider can lower or prevent the interest penalty, not to mention control the repayment process.

II.  Extended Repayment Schedule or Cede to Recoupment?

A provider can set up an Extended Repayment Schedule (ERS) at any time once the first demand is made. If an unfavorable reconsideration decision is issued and the provider has not repaid the overpayment or established an ERS, the provider has two choices: allow Medicare to recoup or request an ERS. As long as a provider continues to appeal, Medicare cannot refer the debt to the Department of Treasury. Interest continues to accrue during recoupment and recoupment can be devastating to a provider whose payer mix is heavily weighted toward Medicare, effectively halting income. If an ERS is put into place, interest accrual ceases. Medicare also takes into consideration the financial hardship that an overpayment debt obligation imposes on a provider, and depending on whether the debt imposes a “hardship” or an “extreme hardship” on a provider, the ERS can be as long as 60 months. For a provider who is not a sole proprietor, the ERS application process can be tedious. The list of documents needed to support financial hardship is extensive, including balance sheets, income statements, cash flow statements, and lists of restricted cash funds, investments, and notes and mortgages payable. If a provider cannot establish genuine hardship, an ERS will be rejected or modified to reflect what Medicare believes is an appropriate repayment schedule based on the provider’s financials. Any repayments made under an ERS do not accrue interest in favor of the provider, if the provider is successful at reducing or eliminating the overpayment upon appeal; likewise, interest does not accrue in favor of Medicare either.

III.  Controlling the Overpayment: Paying the Overpayment Upon Demand

If a provider is able to repay some or all of the overpayment upon demand, the provider has better control over the repayment process during the administrative appeals process, even if the provider adamantly disagrees with the overpayment assessment. The provider can avoid or limit recoupment and interest accrual. The provider will get its money back if it wins on appeal, though not with interest. Of course, if the provider does not win, Medicare keeps the money.

It is important for providers to understand the financial landscape of an overpayment demand. A provider familiar with the recoupment timeline and repayment options can immediately assess its finances and determine the best strategy for addressing the alleged overpayment during the administrative appeals process.

Do you have the policies and procedures in place to effectively deal with a Medicare Recoupment?  Have you received correspondence from a ZPIC or RAC auditor and have delayed responding?

CONTACT US for a free consultation on these ZPIC issues.

IMG_1897Lorraine Ater, Esq. is a health law attorney with the boutique firm, Liles Parker, Attorneys & Counselors at Law.  Liles Parker has offices in Washington DC, Houston TX, McAllen TX and Baton Rouge LA.  Our attorneys represent health care professionals around the country in connection with government audits of Medicaid and Medicare claims, licensure matters and transactional projects.  Need assistance?  For a free consultation, please call: 1 (800) 475-1906.

 

OIG Cautions About ZPIC Conflict of Interest

September 15, 2012 by  
Filed under ZPIC Audits

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From LilesParker.com

ZPICs Have Conflict of Interest

ZPIC Conflict of Interest Report

HHS-OIG recently released a report concerning the professional independence of CMS contractors. Specifically, OIG identified that several organizations serving as Zone Program Integrity Contractors (ZPICs) had conflicts of interest, whereby the ZPIC “could be in the position of evaluating work performed or associated with its own company.” For instance, one ZPIC’s parent company had a contract with a Medicare Part D plan sponsor to provide technological implementation and operations. Another ZPIC’s parent company owned Medicare Part C and D plans which were at work throughout the country. Another ZPIC applicant’s parent company was also a Medicare Part C and D plan sponsor in the zones for which the ZPIC had submitted a proposal. Thus, each ZPIC could be put in the position of having to evaluate its work or the work of its parent organization.

Nevertheless, OIG found that each one of these potential conflicts had in some way been “mitigated.” This is done through screening processes and other techniques, by which those who bid on government contracts and perform the actual auditing duties of the ZPIC are not the same as those administer the company’s (or parent company’s) other programs. We’ve previously discussed some of the Medicaid contractors for various “hot-spot” cities, such as Baton Rouge and Houston, and you might find it interesting to note that a lot of Medicaid claims processing contractors or benefit integrity contractors are companies like Xerox (ACS) and HP (the same companies that you get copiers and computers from). Many of these large conglomerates have found that securing a bid for a Medicare or Medicaid contract can be a lucrative business, but because they are so large, there are often conflicts between the various divisions.

Looking specifically at OIG’s report, the report itself does not name names. It does not identify which companies specifically had conflicts, but does instead note that two of the five ZPIC contracts currently awarded have actual conflicts of interest. This can be a scary thought: what kinds of incentives do the people reviewing my claims for payment or denial have? Could they deny my claims because I’m in a certain state or region, but pay similar claims so that their claims processing department has better numbers? Well, it’s possible – but not probable. 

Effects on ZPIC Claim Review

At the end of the day, a ZPIC is a ZPIC and a RAC is a RAC. These Medicare contractors are designed to identify problematic claims, review them with a critical eye, and deny them if they don’t meet stringent technical and medical requirements. The simple fact that the ZPIC’s parent company owns other health care operations is probably not enough to affect the judgment of individual auditors. These auditors, anyway, are already looking for a reason to deny a claim. In fact, we have been in many situations when denial of 100% of a sample was not uncommon. ZPICs often cite multiple reasons for denying a claim when they update a provider on the results of the review, usually relying on both a technical aspect (missing signature/legibility) and a medical aspect (medically unnecessary service/documentation does not support the level billed). It’s been our experience that a strong and all-encompassing approach when appealing these denials is important.

CMS Changes to ZPIC Bidding

In any regard, the OIG’s report came down hard on CMS for failing to adequately screen ZPICs and their subcontractors before awarding them contracts, noting that, “[c]urrently, CMS does not use a written policy or standard checklist to facilitate its review of Organizational Conflict of Interest Certificates. In addition, we found no documentation showing that CMS conducted a review of some offerors’ and subcontractors’ certificates. In some cases, even after CMS had requested revised certificates, required conflict and financial interest information was still missing.” In other words, CMS ignored a number of its duties in pre-screening ZPICs for possible and actual conflicts. As a result, OIG recommended that CMS develop more formal policies and procedures for reviewing conflict of interest problems and that CMS require bidders to more thoroughly note any actual or potential conflicts.

Robert LilesRobert Liles represents providers in Medicare post-payment audits and appeals, and similar appeals under Medicaid. In addition, Robert counsels clients on regulatory compliance issues, performs gap analyses and internal reviews, and trains healthcare professionals on various legal issues. For a free consultation, call Robert today at 1-800-475-1906.

Scrutiny Lingers for Texas HHAs

August 6, 2012 by  
Filed under Medicare Audits

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I.     HHS-OIG Report Concerning Texas HHAs.

A recent report by HHS-OIG found that a substantial number of home health agency (HHA) billings in Texas were fraudulent or inappropriate. The report noted that several common schemes were identified among home health agencies and used to sort out potentially fraudulent providers, including:

1. Overlapping with claims for inpatient hospital stays

2. Overlapping with claims for skilled nursing facility stays

3. Billing for services on dates after beneficiaries’ deaths

electron-microscopeThe HHS-OIG, CMS, and CMS Contractors (ZPICs, RACs, and MACs) are using comparative data mining to view HHS claims under a microscope, looking for any clues of impropriety, such as the errors above. Importantly, OIG found that one in four HHAs (25%) exceeded one of its sample thresholds that indicated questionable billing. Of all those HHAs with questionable billing, the majority were located in Texas.  HHS-OIG recommended to CMS that several processes occur:

1. Implement a claims processing edit or improve existing edits to prevent inappropriate HHA payments for the three specific errors identified above

2. Increase monitoring of billing for home health services

3. Enforce and consider lowering the 10-percent cap on the total outlier payments an HHA may receive annually

4. Consider imposing a temporary moratorium on new HHA enrollments in Florida and Texas

5. Take appropriate action (i.e. audits and overpayment recovery) regarding the inappropriate payments OIG identified in its sample.

II.     What Do These Things Mean To Your Texas Home Health HHA?

For Texas providers, the most important takeaway is that OIG has recommended (and CMS has stated it will implement) a moratorium on new HHA enrollment. That means no new agencies in the state of Texas, and, if the ban ever gets lifted, every new HHA application will be scrutinized with the utmost care. Moreover, if you close down your business, lose a provider number, or attempt to re-open an HHA, you may not be able to successfully accomplish that in Texas. In addition, CMS may even consider a reassessment of every re-enrollment application it receives from HHAs in the state of Texas.

Moreover, OIG recommended enforcement of the 10% cap on annual outlier payments. This means that an HHA who is an outlier (perhaps because of an unusually complex patient load or a large degree of business) may see their payments capped at 10% greater than the “standard” payment numbers. For an HHA that is expending a lot of resources on staff and providing high quality care to complex beneficiaries, this could represent a real problem.

Finally, CMS and Health Integrity (the Texas ZPIC) will likely closely monitor each and every HHA claim. While HHAs will continue to receive funding under the Prospective Payment System (PPS), expect a substantial increase of both post payment audits and prepayment audits. As Health Integrity begins administrative audits of those HHAs that were targeted in the sample (they may not even know their claims were reviewed since the process was entirely data-driven), many agencies may face increased scrutiny and across-the-board payment denials.

III.     What You Can Do for Your Family

There are 2 steps each HHA should take. First, if you haven’t already done so, implement an effective compliance plan. Second, retain an experienced Medicare post payment audit appeals attorney to represent you through the appeals process.

A compliance plan will give your organization the tools and understanding it needs to ensure that claims are coded and billed in an appropriate fashion and that your company’s business practices and arrangements comply with the numerous laws concerning patient referrals and illegal payments. An effective compliance program begins with a gap analysis and usually includes all seven elements of a compliance plan as a framework. It is important that your staff receives comprehensive training and clear, consistent guidance on what you and your organization expect from each individual member with regards to compliance. For more ways to do this, call us today.

Second, if you have received any correspondence from Health Integrity, you should not hesitate to call an experienced Medicare appeals attorney. Both before the audit results come and after, an attorney skilled in Medicare audits and appeals can give you the guidance you need to give your claims their best chance at eventual payment. While the process can be long and arduous, in many cases it is “do or die” for your business. Health Integrity regularly imposes overpayment demands of one million dollars or more when auditing HHA claims. When the stakes are that high, you need someone on your side you can trust and who knows how this process works.

Robert LilesRobert W. Liles represents providers in Medicare post-payment audits and appeals, and similar appeals under Medicaid. In addition, Robert counsels clients on regulatory compliance issues, performs gap analyses and internal reviews, and trains healthcare professionals on various legal issues. For a free consultation, call Robert today at 1-800-475-1906.

Beware of HHA Compliance Risks in TX and OK

March 19, 2012 by  
Filed under ZPIC Audits

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I.  HHA Compliance Background:

texas-flagOver the past few weeks, several important events and issuances have occurred which should have home health agencies (HHA) in Texas, Oklahoma and the rest of the country rethinking the adequacy of their existing HHA compliance efforts. While the practices of many home health agencies have long been a concern of the Department of Health and Human Services, Office of Inspector General (HHS-OIG) and the Centers for Medicare & Medicaid Services (CMS), the government’s apprehension appears to be at an all-time high.  Last week, HHS-OIG issued yet another report recommending that CMS further tighten its oversight of home health providers through the implementation of additional sanctions for non-compliant home health agencies.  Notably, HHS-OIG’s report has been issued on the heels of a significant home health fraud investigation centered in the Dallas, Texas area which was reportedly initiated by Health Integrity, the Zone Program Integrity Contractor (ZPIC) covering Texas and Oklahoma.

II.  HHS-OIG’s Home Health Report of Fraud and Abuse:

On March 2, 2012, HHS-OIG issued a report entitled, “Intermediate Sanctions for Noncompliant Home Health Agencies” which examined CMS’ ongoing efforts to identify and sanction home health agencies that were non-compliant with Medicare’s applicable conditions of participation. As detailed in the report, CMS (formerly known as the Health Care Financing Administration (HCFA)) was directed in 1987 to develop and implement “intermediate sanctions” against home health providers violating Medicare rules. These sanctions were anticipated to include civil monetary penalties (CMPs), Medicare payment suspension, and even appointment of temporary management of a noncompliant agency. Initially required to implement these sanctions under the Omnibus Budget Reconciliation Act of 1987 (OBRA 1987), CMS issued a Notice of Proposed Rulemaking in 1991, but subsequently withdrew this notice in 2000.

CMS has stated that it anticipates publishing new proposed rules in September 2012 addressing these “intermediate sanctions.”  Frankly, home health providers and their associates cannot continue down the current path.  While both CMS and HHS-OIG recognize the important role played by home health agencies in the care and treatment of homebound Medicare beneficiaries, the government has made it abundantly clear that participating providers must fully comply with applicable medical necessity, coverage, documentation, coding and billing rules.  Non-compliant providers are being immediately suspended and / or excluded from participating in the Medicare program.  Moreover, health care providers who engage in nefarious activities are being aggressively prosecuted.

III.  Health Integrity’s Audit of Home Health Agencies:

Since winning the contract in 2009, Health Integrity, the Zone 4 ZPIC covering Texas, Oklahoma, New Mexico and Colorado, has conducted a wide variety of Medicare post-payment audits throughout Zone 4.  To their credit, Health Integrity’s audits have not been limited to merely large metropolitan areas.  Rather, the ZPIC is in the process of “leaving no stone unturned,” conducting audits and reviews of home health agencies throughout Zone 4, regardless of size, revenues and / or location.

To be clear, Health Integrity’s audits have not been limited to only home health services.  The ZPIC has actively reviewed the operational, coding and billing practices of a wide variety of Part B health care providers in Zone 4.  Nevertheless, the ZPIC does appear to have redoubled its audits of home health agencies in Texas and Oklahoma who appear to be outliers through data-mining activities. After reviewing the homebound status of both prior and current patients, clinicians working for Health Integrity have been thoroughly assessing the care and treatment provided by billing home health agencies.  After carefully assessing the medical records forwarded by the home health agency, in many cases Health Integrity has concluded that it is appropriate to seek extrapolated damages based on the post-payment audit conducted.

IV.  Health Integrity is on the Front Line of Home Health Fraud Identification:

Despite the fact that most Texas home health agencies are doing their best to operate within the four corners of the law, there are still a number of providers who are continuing to engage in wrongdoing. Texas home health providers recently received significant negative media coverage for fraudulent and abusive billing practices allegedly committed by agencies within their ranks. As you may have heard, just last week a physician and several home health agency “recruiters” in the Dallas-Fort Worth area were indicted in the largest Medicare fraud scheme in history, allegedly totaling nearly $375 million for home health services either not needed or never provided. Additionally, it was noted that over 75 home health agencies to whom referrals were made have also been implicated in the wrongdoing.  Such an enormous scheme only further demonstrates the fact that fraudulent activity in home health services is continuing, despite the fact that mostTexashome health providers are well-meaning organizations, trying in good faith to provide medically necessary services to our nation’s most sick and disabled. Nevertheless, such accusations only increase suspicion and scrutiny of the entire home health industry in this region.

In a separate incident, a news reporter recently had a healthy, yet elderly, woman pose undercover as a potential home health patient when visiting a physician in South Texas.  The reporter noted tired-nursethat the healthy patient was allegedly improperly diagnosed and certified for home health services. While some providers may be concerned about the use of patients in undercover sting operations such as this, the fact is that improper conduct is occurring, at both the physician referral and the home health agency level, clearly illustrating why law enforcement is concerned that fraud is continuing to occur in this area of practice. In light of these and similar cases, it is clear why Health Integrity appears to be “ramping up” its reviews of home health providers throughout Texas and Oklahoma.

V.  What HHA Compliance Steps Can a Provider Take to Reduce Risk?

To be clear, there is no proverbial “silver bullet” that can be used by a home health agency to avoid the scrutiny of Health Integrity and / or law enforcement.  Every home health agency in Texas and Oklahoma should expect to be audited.  Rather than wait for such an eventuality, home health agencies should affirmatively review their operations, coding and billing practices to ensure that their practices squarely fall within the rules.  Although not all-inclusive, the following five steps can serve as an excellent starting point when preparing for an audit of your agency’s home health claims:

Recommendation #1Don’t assume that your current practices are compliant, check them out! Conduct a “gap” analysis and implement an effective HHA Compliance Plan.  While most, if not all, home health agencies will profess to have an HHA Compliance Plan already in place, the real question is whether the existing plan is “effective,” or merely a sample that was obtained by the agency in the past.  No two home health agencies are alike.  As a first step, a home health provider needs to engage qualified legal counsel to advise the organization on whether the agency is properly operating at a baseline level of HHA compliance.  If not, remedial steps must be taken so that the agency can move forward in a compliant fashion.

As you will recall, Section 6401 of the Affordable Care Act (ACA) (generally referred to as the “Health Care Reform Act”) states, “. . . a provider of medical or other items or services or supplier within a particular industry, sector or category shall, as a condition of enrollment in the program under this Title . . . establish a compliance program.”  Although HHS-OIG has not announced the deadline for home health agencies to meet this requirement, it is only a matter of time before all health care providers who choose to participate in the Medicare program must have an effective HHA Compliance Plan in place in order to remain a participating provider.

Recommendation #2: As you review your claims, you should abide by the following:  First, “If it doesn’t belong to you, give it back.”  Conversely, “If you don’t owe the money, don’t throw in the towel.”  One of the attorneys in our firm is regularly asked to speak at provider conventions around the country.  For years, he has told providers “If it doesn’t belong to you, give it back.”  This simple concept covers a lot of ground when it comes to Medicare overpayments and is the single best policy you can employ as a good corporate citizen.

Audit-Checklist-red-penRecommendation #3Don’t merely focus on your claims.  Are your business practices fully compliant with applicable laws and regulations?  Health Integrity and other ZPICs serve an essential role in identifying overpayments and other wrongdoing by health care providers. While an audit will almost always include a request for medical records, you should keep in mind that Health Integrity will not merely be examining your medical documentation.  Should you receive a request for documents, it will probably be broken into two major parts. The first section will likely be focused on business-related records such as the following: 

“Business contracts or agreements with other providers, suppliers, physicians, businesses or individuals in place during a specific period.  Additionally, any verbal agreements must be summarized in writing.

A listing of all current and former employees (employed during a specific period), along with their hire date, termination date, reason for leaving, title, qualifications, last known address, phone number.

  • A list of all practice locations, along with their address and phone number.
  • Leases.
  • Employment agreements.
  • Medical Director contracts.” 

One purpose of this section is to assist the ZPIC in identifying potential business practices which may constitute a violation of the Federal Anti-Kickback Statute, Stark Laws and / or the False Claims Act.  Should the ZPIC identify a possible violation, it will readily refer the case to CMS, HHS-OIG and / or DOJ, depending on the nature of the potential violation.

In contrast to the first section of the ZPIC’s request, the second section of the request will usually list the patient records and dates of service to be audited.  The number of dates of service audited differs from case to case.  Regardless of whether the ZPIC requests supporting documentation related to 5 claims or 50 claims, it is essential that you never ignore a request for information.  If additional time is needed to assemble the requested information, call the contractor.  Health Integrity has generally been cooperative with providers needing additional time to gather the records being requested.

Recommendation #4Remember learning how to “drive defensively” in high school?  Your documentation practices should be approached in a similar fashion.   When is the last time that you have reviewed the applicable documentation requirements set out in the Medicare Administrative Contractor’s latest Local Coverage Determination guidance covering the services you are providing?  Health Integrity’s auditors are excellent at identifying one or more deficiencies in your documentation. While you may disagree with the ultimate conclusions reached by their clinicians, you should not completely discount their assessments.  Health Integrity’s findings should be carefully analyzed so that any problems with your documentation can be promptly addressed.

Recommendation #5Engage qualified legal counsel and clinical experts to assist with your efforts. If your home health agency is audited, we strongly recommend that you engage qualified legal counsel, with experience handling this specific type of case.  Moreover, don’t be afraid to ask for references and to inquire about the anticipated cost of an engagement.  While it is often difficult to estimate legal costs due to the various factors faced when handling a ZPIC audit case, most experienced health lawyers can give you a range of expected legal fees.

VI.  Conclusion:

While an effective HHA Compliance Plan cannot fully shield an organization from risk, the implementation of, and adherence to, an effective plan can greatly assist your home health agency in identifying weaknesses and taking corrective action before an audit occurs.  Now is the time to ensure that your practices are compliant – after an audit occurs, it may be too late.

Liles Parker is a full service health law firm, providing HHA compliance reviews, “gap analyses” and training to home health providers and their staff.  Our attorneys are also experienced in representing home health providers in the administrative appeal of overpayments identified in the Medicare post-payment audit process. Should you have any questions, please call us today at 1-800-475-1906 for a free consultation. 

2011. . . The Year of Compliance — Avoiding ZPIC Initiated Medicare Suspension Actions

January 11, 2011 by  
Filed under ZPIC Audits

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(January 11, 2011): As you recall at the end of 2010 we identified the “Top Ten Health Care Compliance Risks for 2011.”  The purpose of this and subsequent articles is to analyze two of those risks; Zone Program Integrity Contractors (ZPICs) and Payment Suspension Actions. Over the next few days we will be discussing these two risk areas in depth.

I. Overview:

As discussed in our “Top Ten” article, we anticipate that ZPICs will ratchet up their use of provider suspension actions in 2011.  At the close of 2010, there already appeared to be an increase in the use of suspension actions by ZPICs in South Texas and in other areas of the country.  In many instances, these actions were the result of sophisticated data mining techniques by ZPICs.  While cases are initiated in a variety of ways (including, but not limited to whistleblower complaints, anonymous reports to the government’s fraud hotline, etc.), data mining is a key tool relied on by ZPICs and government agencies for targeting purposes.

After analyzing the data, ZPICs often send out requests for information or conduct site visits of health care provider facilities.  These requests and / or site visits can result in medical reviews, demands for alleged overpayments, or lead to referrals to one or more government investigative agencies (such as the Department of Health and Human Services’ Office of Inspector General (HHS-OIG), the State Medicaid Fraud Control Unit (MFCU) and / or the Federal Bureau of Investigation (FBI)). Since established, ZPICs have clearly met their goal of developing “innovative data analysis methodologies for detecting and preventing Medicare fraud and abuse.”  Rather than pursuing merely administrative overpayment cases, over the last six months, we have noted an increase in the number of cases referred to law enforcement for fraud investigation.  While seven ZPIC zones have been identified, only three companies have been awarded ZPIC contracts at this time.  Where ZPIC contracts remain pending, Program SafeGuard Contractors (PSC) are typically still operating and are conducting essentially the same duties as their ZPIC counterparts.  The seven ZPIC zones include:

  • Zone 1- CA, NV, American Samoa, Guam, HI and the Mariana Islands.
  • Zone 2 includes; AK, WA, OR, MT, ID, WY, UT, AZ, ND, SD, NE, KS, IA, MO.
  • Zone 3-MN, WI, IL, IN, MI, OH and KY.
  • Zone 4-CO, NM, OK, TX.
  • Zone 5- AL, AR, GA, LA, MS, NC, SC, TN, VA and WV
  • Zone 6- PA, NY, MD, DC, DE and ME, MA, NJ, CT, RI, NH and VT.
  • Zone 7- FL, PR and VI

The following map reflects zones where the ZPIC contractor is currently operating.  Each of the ZPICs listed below are actively sending out requests for information and / or conducting site visits.  In a number of instances, the ZPICs have been noted to be suspending providers from the Medicare program based on variety of alleged statutory and / regulatory violations.

ZPICs have been very active in their site visits which have brought about Medicare suspension and revocation actions. In some cases, these site visits have resulted in allegations of “fraud or willful misrepresentation” with ZPIC’s contacting of CMS for approval to place the provider on payment suspension.  In tomorrow’s article, we will be examining the primary reasons cited by the Centers for Medicare and Medicaid Services (CMS) when placing a provider on payment suspension status.

Robert LilesRobert W. Liles serves as Managing Partner at Liles Parker.  Robert and our other attorneys have extensive experience representing health care providers in ZPIC initiated actions.  Should your Physician Practice, Home Health Agency, Hospice Company, Physical / Occupational / Speech Therapy Clinic, Ambulance Company, Therapy Company, Pain Clinic be subjected to a ZPIC audit, give us a call for a free consultation.  We can be reached at: 1 (800) 475-1906.

ZPIC Audits Seeking to Extrapolate Damages. Is Your Legal Counsel Experienced?

July 20, 2010 by  
Filed under Medicare Audits

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(July 20, 2010): In recent years, we have seen agents for the Centers for Medicare & Medicaid Services (CMS) increasingly rely on statistical extrapolation in ZPIC audit cases. In early cases, we successfully invalidated countless extrapolations by identifying relatively basic reasons for why the calculations were inconsistent with accepted statistical principles and practices.  Now, however, providers should expect for ZPIC audits to ultimately result in a team of staff from the ZPIC (such as a statistician, an attorney and a clinician) attending and participating in the Administrative Law Judge (ALJ) hearing in an effort to have their extrapolation calculations approved by the Court.

Regardless of whether you are providing Home Health, Hospice or Durable Medical Equipment services, if your organization is facing an extrapolated ZPC audit, it is strongly recommended that you engage qualified, experienced legal counsel to represent your interests as early in the appeals process as possible.  Your legal counsel can then engage an experienced expert statistician to assess the contractor’s actions and assist with the attorney’s efforts to have the extrapolation thrown out by either the Qualified Independent Contractor (QIC) or the ALJ hearing your case.  Before you engage counsel, you should consider asking the following questions:

Has the attorney ever handled large, complex contractor audits before? Some firms will happily take your case, despite the fact that they have little or no experience in this area of health law. Don’t pay for your attorneys to learn how to handle a case. While every case is different, an experienced firm will have developed a number of arguments and defenses that may be readily used in your case without having to conduct costly, extensive legal research.

Can the firm provide client references who are willing to speak with you about the quality of work performed on their Medicare statistical extrapolation case?

Who will be working on your case? Will it be an inexperienced Associate attorney or one of the partners who has actually fought and won a multitude of Medicare overpayment claims and cases where the damages have been extrapolated by the contractors?

What are the credentials of the attorneys and paralegals who will be working on your case? Have they ever worked on the side of the government? One of our attorneys served as an Assistant U.S. Attorney for many years, ultimately being selected to serve as the First National Health Care Fraud Coordinator for the Department of Justice, Executive Office for U. S. Attorneys. In addition to a law degree, he also holds a Master’s in Health Care Administration. To fully appreciate the challenges faced by health care providers, you need an attorney who understands both the legal constraints and the practical business risks faced by health care providers.

In several of the ZPIC audit appeals cases we have handled, the alleged error rate has exceeded 90%.  With the resulting alleged damages often in the millions of dollars, few health care providers are in a position to merely pay such an assessment.  Instead, they need experienced legal counsel to defend their interests and set out the reasons why these claims should qualify for coverage and payment. When handling these cases, it is essential that you challenge both the denial of claims and the extrapolation itself (as appropriate).

Robert W. Liles serves as Managing Partner at Liles Parker.  Robert and our other attorneys have extensive experience defending health care providers in cases where ZPICs have sought to impose extrapolated damages.  Should you have any questions regarding these issues, don’t hesitate to contact Robert for a complementary consultation.  He can be reached at:  1 (800) 475-1906.

South Texas Medicare Providers Are Under the ZPIC Audit Microscope

July 16, 2010 by  
Filed under ZPIC Audits

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(July 16, 2010):  The number of ZPIC audits being conducted in Texas appears to be increasing with each passing day.  Health Integrity LLC, the Zone auditor responsible for Zone 4, is proving to be an active auditor of physician practices, physical therapy services, home health care, and other types of Medicare covered treatment in the region.

Even in a nationwide environment of intensifying oversight, Medicare providers in South Texas are under particularly close scrutiny.  According to a study by the Dartmouth Institute for Health Policy & Clinical Practice, updated as recently as May 12, 2010, “even after price adjustment, Miami and McAllen Texas are the highest cost regions in the country.” (Emphasis added).  And don’t forget that ZPIC auditors are essentially being “graded” based on the amount of overpayments recovered, along with the number of enforcement actions handled and referred to law enforcement.

As many Medicare providers in South Texas can attest, the folks at Health Integrity are becoming a familiar sight in their offices and clinics — reportedly conducting extensive on-site ZPIC audits with little if any notice.  To their credit, most health care providers have reported that Health Integrity’s representatives have been reasonable in their requests when conducting an on-site review, typically taking a sample of certain records and asking that the remaining records be sent within a reasonable amount of time after the visit.  Nevertheless, health care providers should take care when responding to the ZPIC’s requests for information.  While a provider may have an obligation to cooperate with the ZPIC, you should contact your counsel to ensure that your rights are protected while still fully meeting your obligations as a Medicare participant.

Notably, ZPIC audits are not limited to post-payment assessments.  ZPIC audits are now occurring as “prepayment reviews”.   A prepayment audit can effectively delay a provider’s cash flow up to six months (and in some cases even longer).  Given the GAO’s recommendation last month that CMS put more emphasis on automated prepayment review, we expect to see this audit tool continuing its precipitous rise for the near future.

Home health providers and other South Texas health care providers in McAllen, Harlingen, Brownsville, Laredo and Corpus Christi, should not wait until their home health claims are under the microscope.  If you have not already done so, we strongly recommend that you implement an effective Compliance Plan covering the services you provide and the claims that you bill to Medicare.

Robert W. Liles serves as Managing Partner at the Firm.  Robert and other Liles Parker attorneys represent health care providers around the country.  ns regarding these issues, don’t hesitate to contact us.  For a complementary consultation, you may call Robert or one of our other attorneys at 1 (800) 475-1906.

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